Fortu Powercell GmbH Case

Nowadays, it is critical for the companies of m both industries to pay a grapple of attention and efforts on the management of engineering and blueprint. Indeed, the tuition of peeled technologies is a latent source of competitive wages and the ability of the companies to innovate and/or to respond to competitors creative activity determine their survival in a long basis. This ability is more or less essential in companies, regarding their matureness and their structure.Most of the start-ups, which usually function as adhocracies, take away a wakeless enough ability to innovate entirely struggle to bring these constructs to the trade. fortu Powercell GmbH re vexs a emblematic example of a start-up with a promising technology offering a share of possibilities, a new type of bombardment, but which does non f atomic number 18 what strategic direction to take in order to achieve long profitability.Studying its situation would the occasion for us to present just a bout(prenominal)(prenominal) concepts that managers in fields where technology and innovation matter need to embrace if they indispensableness to take relevant strategic decisions. We are going to start our synopsis with a quick re thoughter of the case, what are the critical points to keep in mind before to present some considerations relative to the work of several experts, researchers in the management of technology and innovation. Finally, we go away conclude with some suggestions for the administrator aggroup of fortu Powercell.It would help us to answer adequately to the questions of fortu Powercells executive team. Another work we would like to quote is the work of Christensen on troubled innovation. To summarize, we can differentiate two type of innovation sustaining and debauched. A sustaining innovation targets demanding, high-end customers with better performance than what was previously available. A disruptive innovation consists in the introduction of a proceed s, a service which is not as good as currently available convergenceions but compensates thanks to its simplicity, its convenience, its low constitute which would appeal new or less-demanding clients.Thus we distinguish two types of disruptive innovations, the new- grocery store disruption and the low-end disruption. The source angiotensin-converting enzyme is competing with non-consumption, at the beginning, before pulling go forth customers out of the mainstream trade into the iodine beca lend oneself of the convenience of the product/service. The second one is focusing at the low-end of the original mainstream value network, on the customers whose expectations regarding the product are lower than what is actually proposed on the foodstuff.It is quite critical to sterilize what class of innovation is the fortu Powercell because the route people should manage sustaining and disruptive innovations are wholly different. A sustaining technology strategy is not a viable wa y to build new-growth businesses for instance and usually once they have developed and naturalized the viability of their superior product, entrepreneurs who have participateed on a sustaining trajectory should turn most and portion out out to one of the industry leaders behind them.Also, an thought that is disruptive to one business way be sustaining to other. If this is the case, it is better to specify the product or the service in a way that it would be an opportunity which is disruptive relative to all the established players in the targeted market space or another solution is to not invest at all. Otherwise, it could be extremely difficult to beat the established companies which would defend their positions. Burgerlman and Siegel would as well up as contribute to our analysis with their work on the minimum winning game.This is the first ajor market opportunity that is limited enough to provide a work out target for technology and product increment efforts in the sho rt-to-medium term, and sufficiently great(p) that successfully pursue it provides a foundation for long-term corporate development. When the MWG has been be, the top management can dance band relevant milestones against which meaningful submit can be measured. The risk of an undefined MWG is a focus on a placed of feasible but fairly limited and inappropriate milestones along a road that leads nowhere or the elaboration of a serie of vague visions.The first MWG is influenced by 3 drivers, the technology development, the product development and the business strategy. The management team should put a lot of efforts to relaxation their influence in order to prevent one of them to dominate the interplay, because of the potential negative effects related to each one of these driver. Nevertheless, one of them should be the main driver but not all the m the association is trying to achieve its MWG. Shifting the balance of drivers in due time is necessary to achieve this goal.We m ention this work because we would like to determine if one of the options considered by the fortu Powercell management team is a correct MWG, if they have developed a correct pretending about the options they defined. Considering the nature of the product fortu Powercell longing to sell, we must consider the work of Henderson and Clark on architectural innovation or the technology S-curve for pieces of Christensen. About the first named, it raises a distinction between several innovations as they could be incremental, modular, architectural or radical.Incremental innovation essentially refines and extends an established design whereas radical innovation establish a new dominant design. A modular innovation is an innovation that changes a totality design concept without changing the products architecture and ultimately a architectural innovation change a products architecture but leaves the lots and the core design concepts that they embody unchanged. Qualify the fortu Powerce ll innovation would give us some clues about how established firms would react if the product is commercialized.The input of the S-curve theory in our withdrawing is that it forces us to not block that the other technologies are maybe not mature and still have some potential that could lead to a fierce competition between them and the fortu Powercell technology. Finally, we would like to mention the work of Christensen, Musso and Anthony about capturing the returns from research, which talk about when, where and wherefore integration is needed and introduce the notion of decoupling point.Basically, it illustrates the fact that a product with proprietary, interdependent architecture is subject to an interdependence of its components. The way one component is designed and made depends on the way the other components are beingness designed and made. In this case, the control of the design and manufacturing of every critical component of the system by a process of integration allows companies to develop a competitive advantage. A product with a modular architectures means that several(prenominal) sub-systems can be upgraded without redesign everything.In this case, being specialized, not-integrated, is the best solution. We mobilize it is important to keep in mind these notions as fortu Powercell is looking to enter the market of batteries for defined products. If the product has an interdependent architecture or a modular architecture, that makes a difference on how fortu Power should define its strategy. As a conclusion for this part, we want to remind that these theories and works presented are what we chiefly used to mold our thinking about this case, to evaluate the situation of fortu PowerCell and its possibilities. III. SuggestionsIn this part, we are going to present a few suggestions for the fortu Powercell executive team regarding what we presented before. They should give them enough indications to help them find satisfying answers to their ques tions. If we look at the theories we mentioned, it callms that we can just start by defining a set of questions related to them and to other constraints and see if the first option, the plant in Lepzig, is more than(prenominal) a good solution. We could also try to see if there is another solution, another market fraction which appears to be better to the point it everywherecomes the release of a potential market segment.First option The plant in Lepzig (Market segment Power Tools) -How well the fortu battery respond to the four set of questions of the management criteria theory, in the case of the power tools market ? Quite well actually. It appears at first sight that the fortu battery technology would be a profitable technology for the power tools market as it lift a fundamental prior constraint, provide enhanced effectiveness -Is the fortu battery a disruptive innovation or a sustaining innovation for the power tools battery market ?This question is subject to debate but a s we see it, the fortu battery system is in part a disruptive innovation for the power tools battery market. Indeed, it would allow the creation of more powerful cordless tools which lead us to think that this is a new-market kind of disruptive innovation. On the other hand, if we except consider only the less powerful tools such as the screwdrivers, we can see the fortu battery technology as only a sustainable technology.It represents a battery with better characteristics compared to nickel base batteries and that is all. -Is the conquest of the power tools battery market a suitable MWG ? What are their following milestones ? We do not think that the power tools battery market is a suitable MWG because this is only a sustaining innovation for the single largest product category, which means than established players in the market would try to defend their market shares and, in a long-term perspective, we can imagine they would have to sell the business.Second option fortu Powerce ll gives up the power tools battery market and emancipation its technology Another way to formulate the relevance of this option is to bring the question is there a better MWG that fortu Powercell could choose ? A MWG that will compensate the loss of the power tools battery market segment ? afterward what we said in the previous argument, that the power tools battery market segment was not a very good MWG, and considering all the other opportunities offered by this technology, it would be surprising not to find a better one.The advantage with this option is that the first entrant with this technology in the global market wont be fortu Powercell. They would have the chance to have a concrete feedback about what their technology is really capable of when it comes to mass production, what would be the reactions of major players in the business. Quick reminder the first entrant is seldom the one that would capture the value of the technology.Also, it would give them some pecuniary r esource to be relatively independent from external capital, to keep doing some research or for a potential new venture. They will not have to use such a complicated financial operation to gather the funds and maybe they would not have to deal with conditions defined by their partners or at least it would be less constraining. Finally, they will have some time to think about everything we mentioned and there will maximize their chances to define what could be the perfect MWG for them and what milestones it could imply.But they have to keep in mind that is possible that this technology is not a disruptive technology for any market and consequently that long-term development would be difficult. So we think that there must be a better MWG for fortu Powercell and its technology but what would that be Final suggestions In this final part, now that we have defined that the second option is the best, as we see it, we are going to present what we think is a proposition of better MWG for fort u Powercell and we will conclude with a few recommendations.It is important to precise that this is only a proposition, we are not going to develop this thought too further as we think that the question of the fortu Powercell management team is answered and that they consequently have time to evaluate their different options. We think that the pedelecs (bicycle with electric assistance) would be a good MWG for fortu Powercell as it is limited enough to provide a clear target for technology and product development efforts in the short-to-medium term, and sufficiently large that successfully pursuing it provides a foundation for long-term corporate development.Indeed, the prices and margins are high in this market segment and most of the price depends of the battery. The segment size is important, around 100 million, which is big but not too much. It would be a low-end disruptive innovation compared to the NiCD and Li-on cells in the sense where the bicycles would be simpler, with a smaller battery that wont need to be recharged too often, which is much more convenient. Indeed, we think that the technological advantage of the fortu Powercell would lead to these improvements, these enhancements for the product.The bicycles could also be cheaper as the price per Wh would be lower which could drive new customers, previously repelled by the high price. The important market of Netherlands will not be far from Karlsruhe, so a plant could be build over there. If this MWG would be a success, it would be possible to move to a place of MWG electrical scooters (Italy is also not that far from Karlsruhe) electrical cars (which can be considered as the ultimate target, the maximum winning game).Beyond the choice of the MWG, and as a conclusion, we would like to recommend fortu Powercell to pay attention to develop its absorbefacient capacity, in order to remain to the peak of the battery technology and so be able to respond with energy to the responses and attacks of ot her players, and in a long-term perspective, in the case they would be successful, to put a lot of efforts to define clearly its strategic intent.